Re-Examining Cyber-Squatting

by Brendon Carr

Our associate Sun-Hee Kim, a very strongly bilingual Korean attorney (yes, although she attended elementary and middle schools in the US and UK, Sun-Hee came back to Korea and powered through high school and college, and passed the Korean bar examination) at our firm Hwang Mok Park P.C.  I work closely with Sun-Hee and am positively gobsmacked at how much better prepared she is for international practice than even many of the partners were at the larger Korean firms I worked at earlier in my career. These days one may find a number of Korean attorneys (still a limited number, but many more than in the past) who are strongly bilingual. I’m afraid of them. (We all are, actually.)

In tomorrow (July 25)’s Korea Herald she has a piece in the long-running “Law Talk” series to which HMP contributes. The Herald limits contributions to 550 words, which as you know means that no legal topic can be covered in any depth at all. At 550 words, we’re just getting started. Last Friday I spent some time editing Sun-Hee’s piece, which started off around 850 words, shaking and baking it until it got closer to the newspaper’s target. But to be frank, 550 is a straitjacket which prevents conveying anything of any value. On the Internet, however, there is no word limit. Since this topic is of wide interest, I asked Sun-Hee for permission to reproduce her original text. She kindly spent some time over the weekend to add a little more explanation. We hope you find it interesting.

Re-Examining Cyber-Squatting (Extended Edition)
by Sun-Hee Kim, Attorney at Law

Imagine how frustrating it would be to find out your own name was denied to you because someone has already “registered” it, or that someone else was masquerading under your name. Cyber-squatters and “typo-squatters” frustrate businesses every day.

Cyber-squatters are already fairly well-known for registering Internet domain names of already-established, usually foreign brands or companies, in the hope of reselling such names to the “rightful owners” at a large profit.

Typo-squatters take advantage of common typographical errors. Their sites’ domain names are spelled similarly to the sites the users actually intended to visit. For example, misplacing a letter or mistakenly adding a hyphen in the middle of the domain address usually leads to a porn site.

Cyber-squatters and typo-squatters are a nuisance to Internet users, but businesses are becoming increasingly concerned about lost opportunities and collateral damage to their reputation. Statistics show the seriousness of their activities. For example, an average of 2,000 domains related to Microsoft product names are reportedly registered each day.

How can trademark holders retrieve their rightful domain names? In some cases use of a domain name may be deemed to be a breach of trademark or “unfair competition” under the Unfair Competition Prevention and Trade Secret Prevention Act (UCPTSPA). In May 2004, the Korean Supreme Court ordered cancellation of registration of domain name “viagra.co.kr” by an entrepreneur selling herbal potency supplements through the Internet, on the grounds that the domain name may cause confusion with a well-known brand name, thereby constituting unfair competition.

However, often it is difficult to accuse the cyber-squatter of breaching any specific law. Rolls-Royce had a negative outcome in 2004 with respect to the domain name “rolls-royce.co.kr.” The Supreme Court acknowledged that Rolls-Royce was a world renowned brand name; however the registrant could not be found guilty of “unfair competition” or infringing any trademark, because he was not selling any product or service using the domain.

Also, in a Seoul District Court case from 2000, Fedex could not win the domain name “fedex.co.kr.” The registrant used the domain name to sell car parts to Southeast Asia. Because selling car parts was considered to be completely different from courier service, and therefore unlikely to cause confusion, the court held such action neither a breach of trademark nor “unfair competition.”

In some cases the complainant is protected by the Uniform Domain Name Dispute Resolution Policy (“UDRP”), an industry standard policy for top level domains (gTLD) such as .com, .org, and .net.

According to the UDRP, the complainant must prove three elements: (i) the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and (ii) the registrant has no rights or legitimate interests in respect of the domain name; and (iii) the domain name has been registered and is being used “in bad faith.” Korea’s own domestic policy is similar, as explained in more detail later on.

According to the UDRP, the evidence of “bad faith” shall include, but will not be limited to, the circumstances indicating that the registrant has:
(i) acquired the domain name primarily for the purpose of selling or renting the domain name to the owner of the trademark or service mark or to a competitor of such owner;
(ii) registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name;
(iii) registered the domain name primarily for the purpose of disrupting the business of a competitor;
(iv) intentionally attempted to attract, for commercial gain, Internet users to his/her web site.

When Hongkong & Shanghai Banking Corporation (“HSBC”) announced a prospective merger with Credit Commercial de France (“CCF”) in April 2000, someone in Korea registered the domains “ccfhsbc.com” and “hsbcccf.com.” The registrant asserted that he was going to operate an internet site called “Clean Club First & HanSaem Beauty Care.”

However, in November 2004, the Seoul High Court held that since the registrant did not operate any such CCFHSBC business in the four years since he registered the name, it was evident that he did not have legitimate interests to such domain names and that he was using the domain names for “unjust purposes.” In this case, the court used the UDRP as a guideline, on the grounds that the registrant agreed to the policy at the time of registration.

In the cases of .kr and .co.kr domains, the agreed-on policy at the time of registration is usually Korea’s home-grown Internet Address Dispute Resolution Policy (“IDRP”). The Internet Address Dispute Resolution Committee was established in October 2004 pursuant to the Internet Domain Address Act which came into effect in July 2004. The IDRP was established in January 2005.

The causes of forfeiture of domain names in the IDRP are similar to that of the UDRP, as listed in the above, except that the IDRP protects not only the trademarks and service marks registered in Korea, but also products and businesses which are “well-known” in Korea.

Being able to use UDRP or IDRP as a guideline has a significant meaning. Even if the registrant is not actually using the domain name to sell products or services, therefore cannot be found to be infringing the trademark or service mark, there is still a possibility that the trademark holder may retrieve the domain name on the basis that the registrant is using the domain name for “unjust purposes,” such as preventing the registration of or demanding money from the owner of the trademark or the service mark.

However, it should be noted that the arbitration is not final and binding under either of the UDRP or the IDRP. The policies allow for appeal to the court within 10 (UDRP) or 14 (IDRP) days of the arbitral decision. So, even if the arbitration committee orders the forfeiture of the domain name, such order cannot be implemented if the registrant files an appeal to the court and submits to the committee proof of commencement of such litigation.

Domain dispute resolution process is therefore costly, lengthy and its results are not always satisfactory to the trademark holder. All this can be avoided if businesses make sure to secure their domain names at the same time or even before registering any Korean trademarks or launching business in Korea.

But in view of the recent enactment of the IDRP and accumulation of domain dispute related cases in Korea, businesses which have in the past been discouraged by the state of domain name protection ought to take another look at whether the current legal environment would support an action to take back domain names from squatters.

July 24, 2007 | Filed Under How-To, Trademark and Copyright

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